China’s iron ore and coal imports hold firm while corn arrivals hit a 5-year low

Iron Ore & Steel: Iron ore prices hover around the $100/t mark

• Global seaborne iron ore exports finished at 30.14 Mt in the week commencing 11 November, down from a six-week high of 32.54 Mt in the previous week. The drop was largely attributed to multi-week low shipments from Rio Tinto and BHP in Western Australia. In contrast, South African exports climbed to a five-week high of 1.02 Mt, reflecting a steady recovery following rail and port maintenance in mid-October.
• In China, iron ore imports climbed to a five-week high of 27.04 Mt last week, well above the previous five-year average of 24.21 Mt. Strong inflows so far in November could potentially push the monthly imports to a multi-year high, even though crude steel production in the month is expected to stabilise or decline slightly from October’s 81.88 Mt (+6.24% m/m, +3.53% y/y). Steel mills ramped up production in October on the back of improved profitability and nine-year high export volumes.
• Iron ore prices closed stable w/w as of 20 November, with the most traded contract on SGX and DCE rising by 0.46% w/w and 1.57% w/w to $101.03/t and 774 yuan/t ($106.82/t), respectively. Earlier declines on 14 and 15 November were driven by a well-supplied market environment, soft steel demand outlook in winter and little improved property sector data in China. However, prices rebounded as key Chinese cities announced taxes on real estate transactions and traders have reportedly begun restocking for the Chinese New Year holidays in January. We anticipate the SGX TSI Iron Ore CFR China (62% Fe Fines) benchmark to hover around $100/t ahead of China‘s Central Economic Work Conference in December.
  

Second-month SGX and DCE Iron ore prices ($)

Source: SGX, DCE

Coal: Gas strength pushes coal higher, Chinese imports hold firm despite muted demand

• Seaborne thermal coal flows edged lower on the week, despite firm deliveries to China and India, the biggest buyers in the seaborne market.
• China’s imports of thermal coal are still trending higher despite muted demand from the power sector. Imports gained by 600,000t w/w to 9.13Mt last week. But Chinese utilities are well stocked and coal inventories at the northern ports remain firm, suggesting demand might soften in the coming weeks as long as temperatures remain in line with seasonal norms. Coal stocks at Chinese utilities were up by 7.8Mt y/y at 127Mt according to China Electricity Council, while inventories at the Bohai Rim were around 30Mt today, the highest level for the late-November period.
• India’s receipts also held firm, gaining by around 710,000t w/w to 3.4Mt. Coal stocks at Indian utilities have stabilised after trending lower in recent months, in line with firm imports and domestic production performance. Utilities held 37.1Mt of coal in stock, up by around 2.5Mt since the beginning of this month.

India weekly coal-fired generation (GW)

Source: NPP

• In Japan, Tohoku Electric’s second 800MW reactor at Onagawa power plant resumed operations on 15 November, and Chugoku Electric is planning to reactivate the 820MW Shimane reactor online on 7 December, weighing on demand outlook for the winter period. Warmer than usual temperatures are also weighing on power demand in northeast Asia.
• Higher gas prices and colder temperatures are supporting coal generation in Europe. Coal-fired generation averaged 5.6GW since the beginning of this month, a steep increase from 3.7GW in October. The number of heating-degree-days in Berlin rose to 207 over 1-21 November, compared with 147 same period last year.

Germany renewables vs thermal power generation (GW)

Source: Kpler Power

• The recent increase in gas prices improved generation economics for coal in Germany, with margins for the whole of the country’s coal-fired generation fleet moving in positive territory for the remainder of this winter. Escalation of tensions between Russia and Ukraine has pushed gas prices higher, with the month-ahead TTF contract gaining by around 20pc to rise to €46.8/MWh, the highest since last December.

DE implied future generation margins for coal vs gas (€/MWh)

Source: Kpler Insight, Enverus

Grains & Oilseeds: Chinese monthly corn imports hit a 5-year low

• Chinese demand for corn has been absent, accounting for most of the reduction in Brazilian exports from last year. China imported 3.9 Mt, its largest ever monthly corn volume in Nov 2023. At 0.2 Mt, Nov 2024 volumes are significantly lower (see chart). Balance sheet estimates for 2024/25 corn imports into China will reduce as a result.
• Wheat markets found strength due to geopolitical uncertainty in the Black Sea region. Ukraine’s use of long-range missiles to hit Russian targets led to concern over wheat supplies from the region. Aside from geopolitics, wheat markets will also trade winter weather for almost 300 Mt of wheat growing in major exporting countries of the Northern Hemisphere. Initial assessments from Russia are bleak as most of the crop was sown under dry conditions. In the US, better rainfall in the plains has allayed concerns. Over the next two months, temperatures, snow cover, and winterkill will be traded. Pre-winter conditions have a low correlation with yield, however, winterkill can reduce acreage significantly.
• November corn exports from Brazil are set to exceed 5 Mt, lower only than last year’s exports. While Brazil has been exporting less corn y/y, it is important to note that exports are still tracking second highest on record. Nevertheless, it is likely to hand over the mantle of the world’s largest corn exporter back to the US this year.
• Soybean imports into China continue to be strong as origination shifts seasonally from Brazil to US soybeans. Purchases of US beans started late this year and there was fear that China might avoid US beans. However, we saw significant buying activity from China at the beginning of the US harvest. Import volumes from the US have picked up in November as a result, and are likely to continue through January.

China monthly corn imports by origin (Mt)

Source: Kpler

Minor Bulks: Shanghai and London aluminium prices diverge on end of China’s export tax rebate

• Global seaborne bauxite exports reached an 11-month high of 4.58 Mt last week, buoyed by record departures from Australia (1.28 Mt) owning to subdued domestic demand and seasonal strength. In Guinea, exports rose to a five-month high of 2.88 Mt, benefiting from the dry season’s favourable conditions for mining and transportation, despite unresolved tensions between Guinea Alumina Corporation (GAC) and local authorities.
• Rising bauxite supply has yet to temper alumina prices, with the January 2025 contract on the Shanghai Futures Exchange (SHFE) surging 5.15% w/w to a fresh record high of 5,430 yuan /t ($749.38/t) on 20 November. Despite the exchange’s intensifying fight against speculative trading, alumina prices have skyrocketed by 62% so far this year, far outpacing the 6.64% gain in aluminium prices on the SHFE.
• On 15 November, China announced it would eliminate the 13% tax rebate on the exports of semi-manufactured aluminium products—including bars, sheets, tubes, and foils—from 1 December 2024. This policy shift is expected to tighten international supply while boosting domestic availability, prompting a sharp rise of 5.27% in the three-month London aluminium price last Friday while a drop of 1.37% in the Shanghai price on the following Monday. As of 20 November, the London and Shanghai aluminium benchmarks rose 4.03% w/w and 0.07% w/w to $2,630 and 20,880 yuan/t ($2,881.59/t), respectively. Notably, China exported 5.49 Mt of aluminium products in the first ten months of 2024 (+16.90% y/y), with annual exports on track to surpass 6 Mt. Policymakers appear to be prioritising domestic supply, especially as primary aluminium production capacity remains capped at 45 Mtpa while domestic demand continues to grow.
• China’s primary aluminium production reached a record October high of 3.72 Mt, up 2.74% y/y, as elevated prices, robust exports, and unaffected power availability in Yunnan so far this dry season supported operations. Output is likely to remain elevated in November as Yunnan’s power supply remains sufficient and traders accelerate shipments ahead of the tax rebate’s expiry. However, rising raw material costs, particularly alumina, are increasingly pressuring margins, with some smelters reportedly preparing for capacity reductions.

Global seaborne bauxite exports hit an 11-month high (Mt)

Source: Kpler

Dry Bulk Freight: Capesize spot market moderates while sub-Capesizes turns bearish

• The Capesize 5TC settled at $23,307/day on 20 November, showing a smaller net increase of $536/day w/w after the market softened in recent days. A softer trend is also observed in the global Capesize laden-ballast spread this week starting on 18 November, which declined at a faster rate w/w. An accumulation of spot tonnages in key regions put downward pressure on the market.
• Looking at global export volumes, Capesize shipments for the completed week were slightly softer on a w/w basis and 10% lower compared to the same period last year, although they remain within the historical range. In the short term, slower exports of Brazilian iron ore are anticipated due to heavy rains in the region, which could have a bearish effect on the rates for fronthaul and the Brazil round-voyage routes. These routes have already started to show signs of softening. On a related note, the average number of Capesize vessels (100k+ dwt) waiting to discharge iron ore at Chinese ports continues to trend lower w/w, indicating a decrease in congestion.
• Sub-Capesize segments are showing bearish sentiment. On 20 November, the Panamax 5 TCs settled at $10,242/day, declining by $629/day w/w. Global Panamax export volumes were flat w/w, but the deteriorating laden-ballast spread during this week could pose downside risks to the segment's earnings in the short term. The Supramax 11 TCs settled at $12,538/day on 20 November, down $559/day, while the Handysize 7 TCs settled at $12,153/day, down $316/day w/w. The global Supramax export volume rebounded to a firmer level w/w, while Handysize export volume remained flat during the same period.

Dry Time-charter Earning ($/day)

Source: Baltic Exchange

Key Dry Bulk Market Developments

Source: Kpler

Dry Bulk Port Congestion

Source: Kpler

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